Unnecessary preference

Sunday

The Bay County Commission last week took a step toward resurrecting a policy that was better left dormant.

The Bay County Commission last week took a step toward resurrecting a policy that was better left dormant.

In a 4-1 vote Tuesday, commissioners established guidelines for a proposed ordinance that would give preference to local contractors when bidding on county projects. Local companies could match the low bidder’s price provided the local company’s bid was within 5 percent. Local companies not headquartered in the county would only be allowed to match the low bid if their price was within 3 percent. Many counties have similar policies, as does Bay District Schools. The finalized county ordinance must receive a public hearing before a final vote.

The county previously awarded a 5 percent local preference before the commission voted 3-2 in January 2012 to eliminate it. Commissioners then complained the ordinance loosely defined what constituted a local business, which allowed companies with a mere office in the county but headquartered elsewhere to receive the same preference as true homegrown businesses.

Supporters of the preference argue it helps keep money in the county — local businesses hire local workers, who then spend their paychecks locally, boosting the economy. However, the county did not offer any evidence that such a net benefit occurs. Indeed, other county’s preference ordinances merely state as “fact” that a preference for local bidders enhances local employment, increases the tax base and generally boosts the economy.

Any positive impact that occurs has to be mitigated by the fact that the money for the contract first must come out of these same taxpayers’ pockets. And the local preference makes these projects as much as 5 percent more expensive. Taxpayers are basically paying a premium to get some of their money back. Does the economic benefit exceed the 5 percent surcharge? It would be nice to be able to quantify that. Alas, most governments are content to operate on the feel-good notion that they are doing something good for the voters.

If overpaying for public projects truly benefits the local economy, then why limit the preference to 5 percent? Why not pay 10 percent more to local firms? Or 20 percent? After all, that’s more money circulating in the economy. Never mind that it’s also equivalent to digging one hole and using the dirt to fill another.

Reviving the preference after two years suggests it is needed to level a playing field that had become imbalanced in the interim. Yet, the county’s own statistics show otherwise. Since 2012, 70 percent of the county’s 76 projects went to local firms. That’s a 92 percent success rate for local bidders. County staff report that most awards to non-local firms were made when a specific item or expertise was not available locally. Finally, 9 percent of the non-local contractors still had local participation. So the amount of money leaching out of the county’s economy is quite low.

That’s not surprising. Local companies should have built-in advantages to getting county contracts, such as familiarity with local officials, access to local suppliers and shorter distances to travel, that can reduce costs and earn the trust of government contracting departments. The preference tells them they now don’t have to compete as hard to get bids — they have a built-in 5 percent padding on what is necessary to do the job.

Commissioner Mike Thomas, the lone dissenting vote Tuesday, was the only commissioner to acknowledge this.

“It looks like we’re doing a lot for nothing,” he said, later adding, “I just don’t see the need for all of it.”

He’s right.

The ordinance violates the commissioners’ responsibility to the taxpayers to secure the best work at the best price and to treat all bidders equally. At minimum, the commission should restore county’s staff’s recommendation to have a three-year sunset clause. Use that time to study what effect the preference might have on local bidding practices.

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